How much car insurance do I need?

The easy way to compare coverage based on your budget, driving history, mileage and more

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Shopping for car insurance can be frustrating. Every provider claims to have the best prices, policy details are often unclear, and let’s face it, nobody wants to buy something they hope to never use.

However, car insurance is mandatory in most states, and can protect your vehicle on and off the road. So, even if you can’t avoid buying insurance, get the most out of your policy by knowing what to look for.

How much car insurance do I need?

Liability coverage meets the requirements for some states, but just meeting the minimum requirements may not be enough. Answer a few questions to find out how much coverage you need.

Which car insurance provider is best for me?

Looking to save on car insurance? Answer these three questions to find a provider that best fits your needs and budget.

What factors should I consider?

The amount of coverage you need depends on the value of your vehicle, your annual mileage, potential risks to your vehicle and other factors. Ask yourself the following questions to determine how much coverage is right for you.

What is your budget?

The amount you’re willing to pay directly influences how much coverage you can get.

No-fault states

In no-fault states, each person in an accident is covered by their own insurance company, regardless of who caused it. Because of this, many of these states require personal injury protection, a separate type of coverage designed to pay for medical expenses.

Florida

Hawaii

Kansas

Kentucky

Massachusetts

Michigan

Minnesota

New Jersey

New York

North Dakota

Pennsylvania

Utah

At-fault states

All other states follow the at-fault system, where each insurance company pays for damages according to the degree of fault of each party.

What’s most important to you?

While many providers seem to offer similar coverage, your experience with each insurer will be different. Consider the features that mean the most to you and how you can get the most from your premium.

Features. Does the provider or policy offer the features you’re looking for, like roadside assistance or rental car coverage?

Customer service. If customer service is a priority, find out if the provider has a good reputation according to friends, family and online reviews.

Price. How much are you willing to spend for coverage? Decide if you’re happy with a bare bones policy or if you want extra perks and features.

Other types of insurance. Many car insurance providers cover home, health or life insurance and offer discounts for bundling your policies.

Claims service. Do you prefer to file claims in person, online or by phone? How long do claims typically take to file and pay out?

Payment options. Consider whether you’d prefer to pay by credit or debit card, check or cash, and if you want to pay monthly, twice a year or annually.

Local agents. If you prefer having a local agent to speak with, avoid the online-only providers. Many companies offer service through agents and online — the best of both worlds.

Financial stability. Consider each provider’s financial ratings with AM Best. While insurance companies are regulated by each state, strong financial ratings decrease the possibility of a provider failing to pay out claims.

How do I compare coverage?

When comparing coverage, consider the three main types of coverage: liability, collision and comprehensive. Then decide if you can afford any additional coverage. Compare coverage types and costs to determine which fit your needs, based on where you live and how much you can spend.

Type of insurance

What is it?

Who is it best for?

What’s the annual cost?

Liability coverage

The most basic insurance. Pays for property damage and medical expenses of the other driver when you’re at fault.

If you’re looking for the cheapest policy or if your car isn’t worth repairing. The minimum amount of coverage required in most states.

$500–$1,000

Collision coverage

Covers damage to your vehicle when you’re involved in an accident.

If you don’t want to pay out of pocket to repair or replace your car. It’s especially good if your car is new or expensive or if you’re leasing or financing a car.

$100–$300

Comprehensive coverage

Protects your vehicle from damage that happens off the road, such as theft, weather or vandalism.

If you’re looking for extra protection or live in areas prone to adverse weather conditions or high crime rates.

$100–$300

Medical payments coverage

Pays for your medical expenses resulting from an accident, regardless of who’s at fault.

If you don’t have health insurance or need extra coverage.

$50–$100

Personal injury protection (PIP)

This is similar to medical payments coverage, but it also covers the costs of rehabilitation and lost wages if you’re unable to work following an accident.

If you live in a no-fault state, don’t have health insurance or need extra coverage.

$50–$100

Uninsured and underinsured motorist coverage (UM/UIM)

Protects you in if the other driver doesn’t have any or enough auto insurance to cover damage to you or your vehicle.

Those who live in an area with a large number of high-risk or uninsured drivers.

$50–$100

Bottom line

Auto insurance can help protect you from the unexpected and get back on your feet after an accident. Ultimately, the type of coverage that’s best for you depends on where you live, what type of car you drive, whether you’re financing your vehicle and other factors.

Get the cheapest quotes

Compare car insurance companies near you.

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Frequently asked questions.

Yes. In fact, people purchase multiple levels of coverage to increase protection on and off the road. Liability, collision and comprehensive are the most popular, but you can also add medical payments coverage, personal injury protection, uninsured or underinsured motorist coverage for a higher premium.

Since there are so many variables that affect the cost of insurance, it’s tough to say which provider is the cheapest. The best way to get cheap auto insurance is to get quotes from multiple providers, explore their discounts, and compare your options.

Peter Carleton is a writer that covers banking and investing, breaking down what you need to know about where you put your money. When Peter's not thinking about cutting-edge banking apps and robo-advisors, he runs a creative agency and spends his spare time cooking or reading.

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